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Fed Provides Further Updates to Main Street Lending Program, Expanding Availability in Advance of Program Launch

On June 8, 2020, the Federal Reserve Bank of Boston, the administrator of the Federal Reserve’s Main Street Lending Program, released updated term sheets for the three types of loans, “New,” “Priority” and “Expanded,” that will be available under Main Street as well as an updated extensive Frequently Asked Questions (FAQ). The Main Street Lending Program is a $600 billion loan program to provide support to small and medium-sized businesses established, with the approval of the Treasury Secretary, by the Federal Reserve using its emergency authority under Section 13(3) of the Federal Reserve Act, with $75 billion in equity provided by the Treasury Department under the $454 billion appropriation of Section 4003(b)(4) of Title IV of the Cares Act.

The Boston Fed explained in its accompanying June 8 press release that the thrust of the revisions to the loan programs, updating the terms sheets released on April 30, is to “allow more small and medium-sized businesses to be able to receive support.” Among the key changes are:

  • Reduce minimum loan size for “New” and “Priority” loans from $500,000 to $250,000;

  • Increase maximum loan size for “New” loans from $25 million to $35 million, for “Priority” loans from $25 million to $50 million and for “Expanded” loans from $200 million to $300 million;

  • Extend maturity of all Main Street loans from four years to five years;

  • Extend commencement of scheduled principal repayments from the first anniversary of the Main Street loan closing to the second anniversary (interest payments will continue to start on the first anniversary, with interest accrued during the first year capitalized either quarterly or annually in accordance with the Eligible Lender’s “customary practices”); and

  • Increase government’s participation in “Priority” loans to 95% (the government, through the Main Street SPV, will now hold an undivided 95% participation interest in all Main Street loans).

The Boston Fed stated that the Federal Reserve “expects the Main Street program to be open for lender registration soon and to be actively buying loans shortly afterwards . . . Once they have successfully registered for the program, lenders are encouraged to begin making Main Street loans immediately,” although no set date for commencing lender registration has been announced. The Boston Fed also noted that the Federal Reserve is working to establish a separate lending program for nonprofit organizations (nonprofits as a whole are not eligible to borrow under the Main Street Lending Program).

The below annotated chart of the three Main Street loan programs summarizes and highlights key aspects of, and compares differences among, the “New,” “Priority” and “Expanded” loan programs, updating and superseding our prior summary of the April 30 term sheets. Sheppard Mullin is actively assisting borrowers and lenders in analyzing and accessing the funds available on the Main Street Lending Program.

Click here to view full PDF.

Copyright © 2020, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume X, Number 162


About this Author

 Elliot Hinds Corporate Attorney Sheppard Mullin

Elliot Hinds is a partner in the Corporate Practice Group in the firm's Century City office.

Areas of Practice

Elliot focuses his practice on corporate and energy matters. While he is deeply engaged in energy transactions, he also works with clients in a variety of other capital-intensive industries, including manufacturing, health care, and technology.

Elliot works extensively on mergers and acquisitions, debt financings, project development and finance, and joint ventures. The projects he has worked on include renewable energy (including wind,...

 Peter Carson Finance & Bankruptcy attorney at Sheppard Mullin Law Firm San Francisco

Peter Carson is a partner in the Finance & Bankruptcy Practice Group in the firm's San Francisco office.

Areas of Practice

Peter's practice is focused on representing U.S. and foreign banks, commercial finance lenders, debt funds, and other institutional lenders. Peter represents these clients in all aspects of complex secured and unsecured debt financings, including acquisition, senior syndicated, asset-based, mezzanine, second lien, bridge, debtor-in possession, credit enhancement, private placement, leveraged lease and other financings, recapitalizations, and restructurings across a range of industries, such as healthcare, technology, retail, transportation and distribution, media and telecommunications, ski resorts, sport franchises, food and beverage, agriculture, and forest products.

In addition, Peter devotes a substantial portion of his practice to representing buyers, sellers and private equity deal sponsors in various types of merger and acquisition transactions (including mergers involving nonprofits) and to advising institutional lenders, private equity and company clients on Uniform Commercial Code and other commercial law issues.

Charbel F. Lahoud Corporate Finance & Bankruptcy Attorney Sheppard Mullin Law Firm

Charbel F. Lahoud is a partner in the Finance and Bankruptcy Practice Group in the firm’s Los Angeles office.

Areas of Practice

Charbel focuses his practice on representing lead arrangers, agents, lenders and borrowers in both secured and unsecured debt transactions in a variety of industries, with a particular focus on middle market transactions. He has structured and negotiated a wide range of debt transactions including syndicated credit facilities to middle market companies; broadly syndicated,...

Bobby Chipman Corporate Practice Sheppard Mullin Century City, CA

Bobby Chipman is an associate in the Corporate Practice Group in the firm's Century City office.

Areas of Practice

Bobby’s practice focuses on mergers and acquisitions, debt and equity financings, venture capital, partnerships, and reorganizations, as well as daily corporate governance and counsel.

Bobby has extensive experience in advising clients and executing deals in the entertainment, media, apparel, beauty, sports, and healthcare industries.

Professional and Educational Background

Prior to joining Sheppard...

Nicole Danesh Corporate and Securities Attorney Sheppard Mullin Century City, CA

Nicole Danesh is an associate in the Corporate and Securities Practice Group in the firm's Century City office.

Areas of Practice

Nicole's practice focuses on a variety of corporate and transactional matters, including mergers and acquisitions, joint ventures, and corporate governance.